Articles Posted inInsurance Law

In recent years, those who follow the law and legal developments have noted an uptick in cases filed against drug companies, pharmacies, and others involved in pharmaceutical fraud. This focus on pharmaceutical insurance fraud is an important development and these cases help protect individual consumers, U.S. taxpayers, and the public as a whole. We have discussed specific instances of such fraud in our discussion of the PharMerica and CVS cases. In this post, our California medical fraud law firm takes a broader view and examines the most common types of pharma fraud.

Types on Pharmaceutical and Insurance Fraud

Kickbacks in the pharma world typically involve a drug company bribing a doctor into prescribing a certain medication. Bribes may be disguised as Speaker Fees or grant money. This is illegal and very dangerous because the bribe can affect the physician’s judgment, resulting in the patient receiving a drug that is not the best medical choice. Kickbacks are also used by drug companies to get a favored status with an insurance provider.

Back in October, we discussed allegations that the large pharmacy chain, CVS, had been refilling prescriptions without customer approval and fraudulently billing their insurance companies without customer approval. California was a leader in this investigation, with the federal government joining in because of Medicare fraud concerns. Now, a case is pending against another pharmacy company, suggesting a disturbing pattern of pharmaceutical fraud that is of great concern to our San Francisco fraudulent prescriptions lawyer.

An Overview of PharMerica and the Fraud Litigation

PharMerica calls itself, “a leader in long term care pharmacy service.” In simple terms, the company manages pharmacy services in long-term care, assisted-living and other institutional health care settings, dispensing medicines to residents in such settings. According to Reuters, in the 2007-2009 timeframe, PharMerica provided pharmacy services to around 300,000 residents and filled approximately 40 million prescriptions per year. During that time frame, Medicare’s prescription program, Part D, provided 45% of PharMerica’s prescription drug revenue during the time at issue.

There is another insurance-related scandal in the California news this week, this time relating to CVS, the nation’s second largest pharmacy chain. State officials are alleging that CVS Caremark, Inc., refilled customers prescriptions and billed insurance companies without the customers consent.

California CVS customers were surprised to learn that CVS had renewed their doctor’s prescriptions and sometimes enrolled them in automatic refill services, all without their knowledge. The company, which is based in Rhode Island, has a clear policy of requiring the customer’s consent before filling a prescription. Now, the California Board of Pharmacy and the inspector general’s office of the U.S. Department of Health and Human Services (HHS) are both investigating these claims. HHS says these claims impact Medicare, because Medicare is also being billed for prescriptions that patients did not order and did not pick up. This action constitutes Medicare fraud, and these state and federal investigations could lead to criminal charges and local district attorneys becoming involved, as well as the state attorney general and the federal Department of Justice. The Board of Pharmacies also has the power to shut down pharmacies by revoking their professional licenses if the company or individuals have violated the law.

Fraud charges are also possible against CVS under California’s insurance and managed healthcare laws. This case also holds the potential to involve multiple states. New Jersey’s Division of Consumer Affairs is now investigating e-mails sent earlier this year by a CVS executive based in New Jersey, describing an internal quota for prescription refills and threatening pharmacists who missed quotas with “major personnel changes.” CVS acknowledged these emails were legitimate but claimed this was the action of one rogue executive and did not reflect company policy.